CERP.L Regulatory News (CERP)

For immediate release, Embargoed until 7.00 am 31 March 2016

LGO ENERGY PLC

("LGO" or "the Company")

Notice of General Meeting

LGO has today posted to Shareholders a circular and notice convening the General Meeting of the Company to be held at 200 Strand, London, WC2R 1DJ on Monday 18 April 2016 at 10.30 am. The circular and notice ("the Document") will be available on the Company's website www.lgo-energy.com and copies of the Document will be available free of charge during normal business hours on any weekday (except Saturdays, Sundays and public holidays) from the registered office of the Company at Suite 4B, Princes House, 38 Jermyn Street, London SW1Y 6DN from the date of this announcement for a period of one month from the date of the General Meeting.

1 Introduction

On 16 March 2016, the Company announced that it had raised £1.06 million (before expenses) by way of a Company arranged placing of 424,209,334 Ordinary Shares at the placing price of 0.25p per Ordinary Share. The Company has also raised a further £0.30 million (before expenses) at the Placing Price subject to shareholder approval at a general meeting. The purpose of the Document is to provide further details of the Second Placing and to seek the approval of Shareholders of the Resolutions which are necessary for the Second Placing to be completed, to issue new Ordinary Shares in order to settle debts with various outstanding creditors, and provide additional authority to allot shares to raise funds should the market conditions permit.

2 Background to and reasons for Second Placing

2.1 As you know, the last six months have been a difficult period for most oil companies and certainly that has been true for LGO. Nevertheless, the Company continues to produce oil in Trinidad and Spain and is now more optimistic about its future prospects as commodity prices start to turn around.

2.2 In April 2014, LGO embarked on a multi-well program at the Goudron Field in Trinidad designed to increase production and reserves. The well program, conducted in two campaigns in 2014 and 2015, was additionally intended to provide the necessary information for the design of an enhanced oil recovery ("EOR") scheme. In 2014 a total of eight wells were drilled to the deeper C-sand reservoir and production increased to a peak of over 2,000 bopd in early 2015. As a result of additional work, the best estimate of oil in place ("STOIIP") within the field increased in June 2015 from the previous independent review in 2012 by over five-fold and was estimated to be 805 million barrels.

2.3 Proved (1P) gross oil reserves in the producing Goudron Sandstone and C-sand reservoirs increased by over 110% to 1.54 mmbbls, and the gross proved and probable reserves (2P) increased by nearly 60% to 11.37 mmbbls.

2.4 On the basis of the 2014 drilling program, a further seven wells were planned to the C-sand reservoir in 2015, and a pre-paid swap based loan was arranged with BNP Paribas to fund that work. An initial drawdown on that loan facility was made in March 2015 and a program of wells was designed to both increase production and increase knowledge of the C-sand so as to permit a water-flood EOR. Unfortunately during the final phases of drilling the seventh and final well of 2015, the downhole equipment became stuck and despite extensive fishing attempts the equipment and the well were both lost in October 2015.

2.5 This mechanical failure and loss of the last well of the planned 15-well program, GY-678, had immediate and dramatic impacts on the Company. The covenants on the BNPP facility, principally relating to liquidity, were breached and BNPP moved to restrict access to the accounts holding funds already drawn against the facility to pay for the drilling program. All payments of capital and creditor payments from those accounts were suspended with immediate effect, arrangements which have remained until this date. Despite this, capital available from across the LGO Group and the issue of new shares by LGO Energy plc have been deployed where possible to reduce creditor liabilities and to fund some high impact low cost production enhancement work at the Goudron Field.

2.6 By mutual agreement with BNPP the original pre-paid swap was converted to a fixed liability on 26 November 2015, which had the advantage of crystallising the debt to a fixed amount at a low oil price. Since that date LGO has paid BNPP a total of US$1.48 million, and when offset against the restricted funds in accounts controlled by BNPP, LGO has a net loan outstanding to BNPP of US$4.87 million as of 31st March 2016. An indicative schedule of repayments has been agreed with the bank averaging approximately US$0.52 million per month for a further 17 months, covering the gross amount owed including the restricted funds, with the last payment due in September 2017.

2.7 The Board instigated a cost saving program in third-quarter 2015 which included the suspension of fees to the Chief Executive Officer from September, the suspension of non-executive director's fees from October, the immediate reduction in all discretional spend, including travel, and a 50% reduction in the salaries of a number of senior staff from February 2016.

2.8 Goudron E&P Limited, the Goudron Field operator and wholly owned subsidiary of LGO currently has outstanding creditors resulting from the 2015 drilling campaign of US$5.76 million. LGO has to date issued approximately 280 million shares in settlement of invoices with various contractors for a total sum of US$1.0 million and has, subject to shareholder approval, agreed to settle a further estimated US$0.65m following the General Meeting on the 18th April 2016.

2.9 In addition, in November 2015 the Board engaged Wellford Capital Markets LLC ("Wellford") and Height Securities LLC ("Height") to advise jointly on strategic investments in the business. In December 2015 the Company extended this to a "formal sales process" resulting in an offer period so as to attract interest in a possible business combination. The Company ended its formal sales process on 9 March 2016 in order to pursue other funding routes after a number of serious interests including merger proposals had been made but did not lead to a binding offer. Nevertheless, clients of Wellford and Height are still in discussion with the Company over possible investments.

2.10 In Spain, the Lora Concession ("Concession") extension application is proceeding as expected and the application has been referred to the Spanish Council of State (Consejo de Estado) to determine the final legal status of the application. The current Concession runs until the end of January 2017 when its original 50-year term expires. It is anticipated that the Council will review the application in the next 3 months. The Company is optimistic that the Consejo de Estado will support LGO's application allowing the Company to continue production and, subject to funding, to embark on a new investment phase with the security of a 10-year licence term.

2.11 In Trinidad, GEPL has, as recently announced, increased the well repair program and plans to carry out a number of well recompletions in order to increase production and revenue. This program includes the perforation of 180-feet of net pay in the upper C-sand in well GY-671 and the perforation of a 100-foot interval of Goudron sandstone net oil pay in legacy well GY-50, neither of which have previously been produced. These two operations are expected to cost approximately US$150,000 in total and to increase production by a total of at least 100 bopd. Funding for this work will be provided by LGO's wholly owned Trinidad service company, Columbus Energy Services Limited, from cash balances and pre-payments for future work which the company has been contracted to perform.

2.12 The Petroleum Company of Trinidad and Tobago Limited ("Petrotrin") has recently agreed to reduce the overriding royalty rates for the Company's production at the Goudron Field backdated to sales made from 1 February 2016. The new royalty rates, which apply to production at oil prices below US$50 per barrel, will see the Petrotrin royalty rate on the majority of barrels produced reduced by over 40% to rates below 10% with a net revenue benefit at current oil prices and production levels of approximately 10%.

2.13 The Goudron Field is a low operating cost field and there is a strong incentive to increase production, with incremental barrels still being cash flow positive after tax and royalties at oil prices lower than US$20/barrel. The compact nature of the facility, the small dedicated workforce and the presence of a significant number of recently drilled wells, lead to lower than average operating costs, even by Trinidadian standards.

2.14 Consent has been granted for a further 45 wells at Goudron Field. The Company continues to develop a program of Goudron Sandstone wells at the Goudron Field, and continues studies for a major waterflood project to enhance oil recovery using data from the 15 C-sand wells recently drilled. All 15 wells drilled in 2014 and 2015 penetrated material Goudron Sandstone oil pay; however, to date only one of those wells has been completed at the shallower level. A program of approximately 20 new wells targeting infill locations in the Goudron Sandstones are planned to a maximum depth of approximately 1,900 feet using the company-owned heavy workover rig. The wells are conservatively estimated to cost US$450,000 per well with initial production of at least 75 bopd per well. This program will commence once funding is available, and it will proceed on a well by well basis as expensive mobilisation or site preparation are not involved.

2.15 Taking all factors into consideration, with the continued support of shareholders and stakeholders, and with new capital available and applied to the Goudron Field, in the short term and La Lora upon license renewal, the Company is optimistic that it can meet its commitments and return to growth.

2.16 As announced on 16 March 2016, the Company raised £1.06 million (before expenses) by way of the Initial Placing Shares and such net funds will be used as working capital by the Company in order to fund the Group's key commitments over the next few months and to maintain the development momentum of the Goudron Field. These funds will allow the Company to make the payments to the Company's bankers, BNPP, until May 2016 and continue the oil production enhancement work recently announced.

2.17 In addition to the placing of the Initial Placing Shares, market conditions allowed the Company to raise a further amount of £0.30 million before expenses at the same Placing Price conditional on Shareholder approval.

3 General Meeting and the Resolutions

The Directors do not currently have the authority to allot the Second Placing Shares or any new Ordinary Shares to settle certain debts with various outstanding creditors. Accordingly, the Board is seeking the approval of Shareholders to allot the Second Placing Shares and Service Shares on a non pre-emptive basis as well as asking for some additional authority to raise additional funds in future by way of equity fundraising or otherwise to allow the Company to move quickly should market conditions permit. Set out at the end of the Document is the notice convening a General Meeting of the Company to be held at 200 Strand, London, WC2R 1DJ on Monday 18 April 2016 at 10:30 a.m., at which the Resolutions will be put to the Company's Shareholders. In particular the Resolutions to be proposed at the General Meeting will be as follows:

Resolution 1 - Directors' authority to allot the Placing Shares and new Ordinary Shares

This is an ordinary resolution granting general authority to the Directors to allot the Second Placing Shares and new Ordinary Shares up to an aggregate nominal amount of £988,513.26, representing 50 per cent. of the Ordinary Shares currently in issue. The amount will allow the Second Placing Shares to be issued and provide the Directors with some additional authority to move quickly if market conditions permit in future. This authority will expire at the conclusion of the annual general meeting of the Company to be held in 2017.

Resolution 2 - Directors' authority to allot the Service Shares

This is an ordinary resolution granting general authority to the Directors to allot the Service Shares up to an aggregate nominal amount of £100,000. The amount will allow Service Shares to be issued pursuant to existing settlement arrangements with certain creditors however if the Company entered into any additional settlement arrangements with other outstanding creditors, it may need to seek additional shareholder authority or use part of the authority granted by Resolution 1 subject to the passing of such resolution. This authority will expire at the conclusion of the annual general meeting of the Company to be held in 2017.

Resolution 3 - Disapplication of pre-emption rights for the Second Placing Shares and new Ordinary Shares

This is a special resolution authorising the Directors to allot new Ordinary Shares for cash up to the threshold described in Resolution 1 on a non pre-emptive basis pursuant to the authority conferred by Resolution 1 above. This will allow the Board to allot the Second Placing Shares and any new Ordinary Shares without recourse to the Shareholders so that it can move quickly from time to time as it deems appropriate. This authority will expire at the conclusion of the annual general meeting of the Company to be held in 2017.

Resolution 4 - Disapplication of pre-emption rights for the Service Shares

This is a special resolution authorising the Directors to allot the Service Shares for cash up to the threshold described in Resolution 2 on a non pre-emptive basis pursuant to the authority conferred by Resolution 2 above. If the authority is granted, it would be exercised if the Directors believe that to do so would be in the best interests of the Shareholders as a whole. This authority will expire at the conclusion of the annual general meeting of the Company to be held in 2017.

4 Action to be taken by Shareholders

Shareholders will find enclosed with the Document a Form of Proxy for use at the General Meeting. The Form of Proxy should be completed and returned in accordance with the instructions printed on it so as to reach Share Registrars Ltd, Suite E, First Floor, 9 Lion and Lamb Yard, Farnham, Surrey GU9 7LL as soon as possible and in any event not later than 10:30 a.m. on Thursday 14 April 2016. Completion and the return of the Form of Proxy will not prevent Shareholders from attending and voting at the General Meeting should they so wish.

5 Risk Factors

Your attention is drawn to the following risk factors. The Board consider the following risks to be most significant to shareholders and potential investors but the risks listed do not purport to comprise all those associated with an investment in the Company and are not set out in any order of priority. Additional risk factors and uncertainties not currently known to the Directors or listed below may also have an adverse effect on the Company's business and an investment in the Company.

5.1 In the event that the Resolutions are not passed, the Second Placing will not be able to proceed in the manner envisaged by this Document, with the result that the anticipated net proceeds of the Second Placing will not become available to the Company and the Company will not be in a position to issue Service Shares pursuant to existing settlement arrangements with certain outstanding creditors. In addition, if the Resolutions are not passed, the Company will not be able to move quickly to raise additional funds to meet the indicative repayment schedule agreed with BNPP. The Company may therefore be required to seek alternative financing including debt financing on whatever terms are available to it, which may result in greater dilution of Existing Ordinary Shares and/or sell its assets at whatever terms are available to it subject to the existing security arrangements in respect of the debt to BNP Paribas.

5.2 As announced on 4 March 2016, the Company and BNPP reached an agreement on a revision to the indicative schedule of repayments entered into in late November 2015. As at the date of this letter, whilst all payments are up-to-date, there has been no additional agreement to an extension of the period of reduced payments into May and beyond and there can be no assurances that such an agreement will be reached with BNP Paribas therefore it is possible that the Company's cash resources will be depleted if an agreement to extend the period of reduced payments is not reached with BNPP and/or new funds are not raised to meet the indicative repayment schedule.

5.3 GEPL remains in default of its existing covenants to BNPP as announced on 4 March 2016 and the debt remains on demand. The associated security arrangements remain in place until the default is remedied and there are no assurances that BNP Paribas will not enforce the security arrangements associated with the debt. In such circumstances, it is possible that the Incremental Production Service Contract currently held by GEPL in respect of the Goudron Field would be terminated by Petrotrin and the Company would not be able to satisfy its financial obligations under the security arrangements unless new funding is raised.

5.4 The Company's future remains uncertain and cannot be guaranteed notwithstanding the funds raised by way of the issue of the Initial Placing Shares and subject to the passing of the Resolutions, the issue of the Second Placing Shares. The Company's and the Group's cash flow remains limited in a period of low commodity prices, global economic and market risks, and reduced field activity, in the context of the requirement to meet the BNP Paribas' debt repayment schedule.

5.5 The Company has outstanding trade creditors of US$5.76m related to the GEPL operations. Whilst this is being carefully managed through open dialogue and interim payments where possible, there can be no guarantee that an acceptable long term repayment schedule can be agreed by the parties. In the absence of such agreements, it is possible that creditors may take action against the Company.

5.6 The oil price remains an important driver of the Company's profitability and remains outside of the Company's control. Whilst oil prices have improved since the start of the year, they remain significantly below the 2014 and 2015 price averages. Price volatility remains high and there can be no guarantees on the direction of price movement.

5.7 The Company has used available data and standard industry techniques to forecast operational factors such as costs, timing and future production levels from the field and individual wells however uncertainties remain and there can be no certainty that anticipated outcomes will be achieved.

5.8 The risks noted above do not necessarily comprise all of the risks potentially faced by the Company and are not intended to be presented in any assumed order of priority.

6 Recommendation

The Board unanimously believe that the proposals set out in the Resolutions are in the best interests of the Company and its Shareholders and unanimously recommend you to vote in favour of the Resolutions as they intend to do in respect of their own beneficial holdings in the Company.

Steve Horton

Non-Executive Chairman

Enquiries:

Appendix I

EXPECTED TIMETABLE OF EVENTS

Note: All references to times in this timetable are to London times and each of the times and dates are indicative only and may be subject to change. Any such change will be notified by an announcement on a regulatory information service.

Appendix II

DEFINITIONS

In this announcement, the following expressions shall have the following meanings, unless the context otherwise requires: